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BGT1
March 10, 2022
Question

How do I categorize payments that are issued back to owners for expenses???

  • March 10, 2022
  • 1 reply
  • 0 views

Hello,

 

I am currently operating a Trucking business with 2 other partners.  When we started, we were paying for expenses out of our pocket and then paying the money back individually once it's in the company account.

 

How do I categorize the transaction showing the money paid back to the individual owner out of the company's account?  So far I have been categorizing it as Partner Distribution.

 

Also, how do we record a transaction that came out of our individual accounts for expenses to balance it out.

 

Regards

1 reply

Rustler
Rustler
March 10, 2022

Since you are using a distribution to pay back the owner, that must mean the company is an S-corporation.

 

But there are no partners in an S-corporation

 

So in an S-corporation when you use personal funds to pay business expenses, that is a loan to the company. Then when you pay it back you paying down the loan

 

In a partnership, money you put into the business is an equity investment, and money you take out is an equity draw

B
BGT1Author
March 10, 2022

Were setup as an LLC. So therefore money paid for expenses is Partner Investment & money paid reimbursed for expenses is Partner Distribution correct?

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